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The Times reported on 29th July on ‘cash strapped’ Dorset County Hospital Foundation Trust spending £2500 / day on an interim chief executive, and there was the predictable angle covering the outrage from union representatives about the justification for paying such exorbitant fees to interims when front line services are under threat. Tales of spending excess in what are supposed to be times of austerity make for good copy at the moment, and its easy for the media to fan the flames of public condemnation, but the public don’t always see the full picture. The media create a glass ceiling in the mindset of the public around the Prime Minister’s salary, after all he does have the most important job in the country? But market forces and consumer demand dictate the earnings of bankers, footballer and pop stars, and likewise market rates for interim managers in the NHS are driven by supply and demand and return on investment. Rates for interim chief executives are roughly £2500 / day because trusts are willing to pay it, and because there are not a huge number of credible ex NHS Chief Executives out there to create over supply and drive down rates. As the chairman of the trust comments in the article, the interims at Dorset represented good value for money, at a cost of 647K, and they were instrumental in reducing the trust’s deficit by 8.5M, that’s a return on investment of 13:1! And what would the cost have been of doing nothing? One would have to assume that in recruiting the interim team the board of the trust had concluded the experience and capability did not exist in-house to address the deficit. If they could have done it themselves, they would have done it themselves.
I met a candidate last week with a background in turnaround and financial recovery work, he was on the market but had recently had a verbal offer from an acute trust rescinded after the local press whipped up a storm and the local MP stepped in when it was discovered their local hospital was about to employ a interim at £1500 / day. I sincerely hope that there is a growing recognition of the value added by NHS interim managers, and opportunities for them to assist trusts are not thwarted by local press trying to sell papers and politicians trying to score points with their constituents. One of the issues is around perception: interim managers operate as individuals, it personalises the fees and it just doesn’t sit well with the public to think that individuals can earn that much in public services. The reality is that if you really asked the public whether they would be happy about their local trust making an investment which would realise a ten fold return, which would cut waste, improve healthcare services, reduce a deficit and help safeguard front line jobs indefinitely in their local community, most would be overwhelmingly in favour.
Your comments as ever are always appreciated.
August 3rd, 2010 at 2:29 pm
I would agree that demand and supply, and indeed the benefits of knowledge and experience in a market where beleagured roles such as an acute trust CEO are increasingly hard to fill. Executive boards up and down the country are peppered with interims, just as clinical staff are supplemented by locums to fill the many gaps. It’s not a case that they can afford to pay the rates - they simply can’t afford not to!
But there is another factor we should consider: within their establishment, most trusts lack both the bandwidth and the skills to meet the considerable need for change at all levels within their organisations. Not just because of national reorganisations, though 15 of them in the past 30 years is by common consent way too many, but especially change and turnaround plans within their own organisations.
OK, so buying in Management Consultants is almost a cliche these days, though programmes are also known to be staffed by freelance specialists too. Whatever happened to management development within the Service? A simple answer: most trusts are running on empty. They live in the here and now, and even the most upskilled of management staff are dragged down to earth by crisis management. If they have learned how to manage proactively, the opportunity has been ripped from their grasp.
The most knowledgeable people on running operational areas tend to be General Managers or equivalent, followed by Service Managers. And because they are the most knowledgeable people, they are the first to be dragged off to resource change programmes. Result: either they are backfilled by interim staff or they are expected to double up and do the equivalent of two or three jobs without extra pay. Their next in line are equally, if not more busy and can often not spare the time to act up.
And that’s not all: the most dedicated management staff in the world are suffering sickness absences through stress and overwork, which again can only be filled by interims. Budgets are tight, so vacancies are not filled.
By all means politicians and news media can bleat about the costs of employing interim staff, but few if any calculate the impact if those staff were removed. But the message for politicians is not difficult to read: if you want hospitals to equip their staff to manage effectively and employ the resources needed to do the job, start by giving the service a period of stability and the opportunity to manage effectively.
August 3rd, 2010 at 2:52 pm
As a senior finance exceutive qualified with a Big 4 and an MBA but no NHS experience, I am finding it impossible to get interim work in this sector at a time when the NHS, like the rest of its public sector counterparts, faces huge challenges in delivering unprecedented spending cuts and restructuring and in need of strong financial leadership.
August 4th, 2010 at 6:48 am
Steve
You raise a timely issue in your blog. There is a great danger that we start generalising in this debate. As a taxpayer we should all be concerned that spending on public services represents value for money. This means looking at the outcomes achieved in an interim assignment, be this money saved, succesfully addressing long avoided problems on quality of service or a turnaround which ensures more sustainable public services moving forward.
Unfortunately the headline benchmark of the Prime Ministerial salary is n’t helpful. Partly because we are not making like for like comparisons. £142,000 pa basic pay is a reasonable remuneration, but only part of the benefit package of a Prime Minister. A subsidised home-office accomodation in central london, a grace and favour weekend property at Chequers, chauffered car, 24 hour protection for life, employer enhanced pension and end of office earnings opportunities for the obligatory biography and paid speaking engagements. Costing these elements of total reward would boost the headline pay rate of £142,500 considerabley
I believe most people go into politics out of a belief in public service and wanting to improve conditions in the UK. Most interims are n’t in it just for the money, it is about variety of work, tackling difficult problems, making a genuine difference and delivering more value to a client than they have had to pay out for your services.
August 6th, 2010 at 6:44 am
The trick for interims and companies like Interim Partners is to alert the media to the impact that interims bring .. not least the fact that the ROI is invariably of high order and that they are indeed interim and hence don’t attract overinflated pension contributions and the host of other oncosts that a full time postholder incurs
August 6th, 2010 at 7:45 am
Having found myself in a similar situation to Jay, and having spent considerable time, effort and money together with colleagues trying to enter the public sector as an interim, in particular the NHS, to no avail, the revelation of the levels of interim fees created by the belief that only a person with NHS experience can carry out a credible turnaround is quite frankly shocking.
The question is almost begged, why did the NHS senior executive leave the NHS in the first place? Was it to be hired back at a multiple of the original level of remuneration? Is there a degree of nepotism, dare one speak of corruption, at work?
With my experience that has seen turn-around success from automotive to airline, from chain making to gold mine and many more, I still fail to see why the NHS remains adamant, along with the rest of the public service, that only interims from within the respective service can be successful. If they would open up the door, then not only would the success be at least the same - fresh eyes see new ways to save - but the natural market forces would drive the fees to the level of the rest of the market. The 13.1 return would be in excess of 25 or 30 times!! Now that would be spectacular. Additionally, the NHS trust that presently affords one high fee interim, could now drive cost down across the board with more experienced resources “on deck” to really change the whole structure and corporate culture permanently.
August 6th, 2010 at 9:18 am
Picking up on Jay Mehta’s comments, and as a Managing Director and CEO of engineering and manufacturing companies for over 25 years it frustrates me to read that there are “not a huge number of credible ex NHS Chief Executives out there to create over supply and drive down rates”.
For all my career, whilst striving to deliver quality products and services my customers want, I have been driving out costs and improving efficiency in order to survive in a competitive world market.
During that time, survival in the public sector has been about finding more money to fund additional, frequently unnecessary, “services” in order to employ more people.
Suddenly, they need people with the kind of experience senior managers from manufacturing can offer.
I’d be happy to do the first month for free, just to help break this incestuous cycle of appointing ex NHS staff at inflated rates instead of experienced change managers.
August 6th, 2010 at 1:53 pm
Perhaps the Times Correspondent should ask a different question. Instead of asking why pay £2500 per day for a chief executive, or asking why the NHS employs 100s, if not 1000s of interims on rates from £400-£1000 per day, The Times should consider a different question: Why doesn’t the NHS, an organisation with over one million employees, have effective policies for career planning, progression planning, staff development planning, and training programmes that can groom salaried managers in sufficient quantities and sufficient skills to fill the vacant posts as they arise?
All companies have to address these questions. Most do it successfully, and are able to transfer and promote from within, and only recruit interims on an exceptional basis.
Whilst core issues such as these remain under addressed, the NHS will continue to have little option other than to look externally to supplement managerial skills.
As interims focussed on the NHS, perhaps we should be thinking about our relative competiveness compared to management consultancies, or service companies rather than debating an opportunist Times article!
August 10th, 2010 at 11:11 am
As another senior finance person who has worked with the NHS and private healthcare sector over the years i think that interims are a necessary part of any change programme, they bring objectivity, energy and enthusiasm, which are all essential ingredients of any change, into organisations that are sometimes quite flat. There is also quite a lot of self interest in the public sector as a whole and whilst i am not criticising anyone for trying to protect their job (especially in the current climate)i think that we all recognise that turkeys don’t and won’t vote for Christmas and if the sort of change that is necessary is to be affected intelligently (with waste being cut, income streams maximised, services and management shared where possible and investments in improvements still being made)then third party people have got to be involved. We should also look more closely at the benefits that have been identified and or achieved when we are looking at costs as not to do so, how ever good a story it makes, can be very misleading.
August 15th, 2010 at 10:35 am
The fact of the matter is that NHS still requires the specialist knowledge, experience and expertise of Interim professionals. The professionalism and management capacity of interim managers have made substantial contribution towards better service delivery and deficit reduction.
It is an illusion on the part of the Times commentator to assert that interim managers are excessively paid when the reality is that some are even underpaid in relation to their productivity.
It is, in the overall public sector interest to continue to hire the best talents and skills available to make efficiency savings.
August 19th, 2010 at 10:45 pm
I’d love a role in the NHS. Firstly, because as a citizen I believe in it and would like to be able to make a contribution and, secondly, because it pays so very well (or appears to have done so in the past). I have come to appreciate that I am not right for it at the moment because I am the sort of person who wants to make things happen. I am very good at influencing but even the best need to operate with others who see the need for change. Rabbits in the headlights could perhaps describe some of the NHS managers that I know. Maybe October will change all that? Should that time come then the NHS will discover that the best of private sector interim managers have all the cultural sensitivities and people skills that they need in order to be successful. After all, we’ve achieved in lots of different environments already. We may be a lot more focused though and less forgiving of inadequate performance. Would that be so bad if the sick got better service at lower cost?